Hi Sifu,

Lets say im getting my first property, a condo price at 430k.
Is it better to loan 90% or 80% ? how about the tenure of the loan

To put it in clearer picture

Condo price = 430k
Maintenance fee = 300 per month

Current liability
Car loan at 500 per month
PTPTN at 300 per month
Medical insurance at 285 per month
Parent at 500 per month

Current financial standing
60K+ Account 2 in KWSP
110k in FD
60k in stocks market
Roughly total up around 220-230k

Would it be better to loan at 90% or 80% ? 25 year, 30 years or 35 years ?
Im 33 years old, gross salary 10k+. take home nett salary 8.3k monthly

Max period max loan, for flexibility and the interest rate is low.

Also get a flexi loan so you can pay off the principal.

My current house I took 30 years, now 5th year and I only left 20% of the principal to pay off..

This post has been edited by MeToo: Mar 29 2022, 04:01 PM

I had always heard people advise is to take max loan with max tenure .. but wouldnt it be a lot of interest we are paying if paying monthly installment based on the calculated monthly payment ? or the reason behind this is due to the fact that must take Full Flexi laon where all extra money is parked into the CA account so that the daily interest calculation will minus out the principle from the total amount we had in the CA account ?

So what you did is u paid more than the monthly installment. Which you requested to bank to pay it off directly to the principle everytime ?

There's another way which i heard is to park the money into the current account, but its not directly used to pay off the principle, it served as purpose to knock of the daily interest calculation from the principle. But incase there,s emergency to use the money, it can still be withdrawn. am i rite ?

Use online banking, dont even need to tell the bank, just click on "Pay Principal" and you pay whenever you want.

Flexi loan also means if you have an emergency, just write ot the bank and you can take out whatever extra you paid into the principal. Very very popular with business owners who will use the money to roll...

If you attended any personal financial planning before, very likely option to be taken is to max out your loan tenure with flexi loan repayment ( you can pay more / lump sum to reduce the % on the principal balance).

Reasons being simple:-

1) Lesser monthly financial commitment - you get more free cash flow for emergency / other investment purpose.

2) The worry on more total interest to be paid at the end of the total tenure period - fallacy. For financial literate person, this property is most likely to be disposed before the loan tenure ended or the loan can be cleared early with early settlement amount.

Yes

A shorter tenure means paying more on principal monthly and thus reducing the interest charge on the outstanding principal.

Max it out, interest rate is low. Can free up cashflow and invest in other assets.
You may also park some cash in your flexi loan too.

Nowadays semi-flexi loans allow you to pay extra to offset principle too. You can withdraw excess payment - mbb allows online withdrawal (pay RM25) while some other banks insist you do it at the branch, with service charge too.

You need to find out whether there's a cap on extra pymt - for example, HLB only allows up to 30% principle reduction for semi flexi and up to 70% for full flexible. Pbb caps at 70% of balance in current account for full flexi.

Beware of overdraft facility that is sometimes compulsory in flexi loan - there could be a commitment fee (charge you for unutilised od).